Rolls-Royce is preparing to close factories temporarily, reduce working hours and cut benefits, just as workers at one of its oldest plants prepare to launch the first strike at the company for 41 years.
Staff were warned last week by email that the aero-engine maker was looking at new measures in its current cost-cutting drive “around pay and benefits and potential operational shutdowns” to cope with the collapse in aircraft demand as a result of the pandemic, said a person with knowledge of the situation.
The company confirmed the email and said employees would be updated in the coming weeks. One aim is to cut management costs by a third, said Chris Cholerton, head of civil aerospace, in the email. There are no new job cuts planned beyond the 9,000 announced earlier this year, the company said.
Rolls-Royce shareholders will on Tuesday vote on the company’s £2bn deeply discounted three for 10 rights issue. The cash raising will release government support for a further £3bn in debt, giving the group much needed liquidity to survive what is expected to be a protracted downturn.
The company has targeted cost savings of £1.3bn by end of next year and the renewed drive to reduce spending suggests that measures announced last spring are not delivering fast enough. “It goes back to the fact that we are having to restructure the civil aerospace business for the new lower demand we are facing,” it said. “We see that going into the medium term.”
Meanwhile, staff at Barnoldswick in Lancashire — where the world’s first jet engine was built in 1943 — are planning three weeks of targeted strike action from November 6 in protest at proposals to shift some production to Singapore.
Barnoldswick employees were sent to Singapore more than a decade ago to train workers in a new factory there, having agreed to help with the set-up after a written agreement from management that work would not be transferred, a union official said.
As part of rationalisation plans, Rolls-Royce is planning to merge two sites at Barnoldswick. The workforce has fallen from 740 to 550 since the start of the year. Unions estimate that a further 350 jobs could be at risk.
Rolls-Royce said it had not identified a number of jobs at risk and that the proposals were not yet final. It denied it had plans to close the site and said it would keep a technology development team there.
“We are disappointed to receive notice of industrial action at our Barnoldswick site and remain committed to meaningful consultation with employee representatives and trade unions on the future of the facility,” the company said in a statement.
But the Unite union that represents a large part of the workforce fears that Barnoldswick’s future will not be viable, with its main focus expected to be on making blades for older engines, for aircraft that will be phased out more quickly as a result of the downturn.
Unite’s national officer Rhys McCarthy said industrial action could still be suspended. “There is still time before strike action begins for Rolls-Royce to reverse the decision to offshore jobs, or present alternative plans to ensure the Barnoldswick factory’s long-term future at similar employment levels.”
Rolls-Royce has been hard hit by the current crisis because its business is focused on the large engines that power wide-body jets used for long-haul international travel. This part of the market has been particularly hard hit, with recovery unlikely before 2024 -2025.
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